Economic Insight: Population growth in Germany

  • The record immigration waves of recent years are the main reason for the revision. These have prompted demographers to also increase their assumptions about net migration going forward. Since migration flows depend on a host of economic and political factors in both sending and receiving countries, such assumptions are a very shaky basis on which to revise population forecasts.

  • Migration also accounts for a recent uptick in the German birthrate, as mothers with foreign citizenship have noticeably higher birth rates than German mothers. But since birthrates among immigrant communities tend to fall towards those of their host countries in due course, this increase in the German birthrate may turn out to be transitory.

  • Ceteris paribus, a larger working-age population would push up Germany’s long-term growth potential. However, since much of the additional labor con-sists of immigrants, partly from less developed parts of the world, much will depend on Germany’s ability to educate and integrate the new arrivals.

  • German policymakers would be wrong to take the new, more optimistic population forecasts as a reason to slow down efforts to prepare the country for an aging population. Aging remains a common factor in all available population projections. If Germany is to avoid overburdening its social security and healthcare systems, it urgently needs to invest more in education and return to the issue of pension reform.